december 2016 quarterly activities report for personal use ... · • purchase of the mobile...

30 January 2017

Exterra Resources Limited (“Exterra” or “the Company”) is pleased to provide a summary of activities undertaken by the Company during the December 2016 quarter which has focussed on the Linden Gold Project Second Fortune Mine Development and Linden Exploration. HIGHLIGHTS: • DMP approval of the Project Management Plan (PMP) for

underground mining activities. • Completion of cell 1 of the evaporation pond and commissioning

of the pit dewatering system. • Completion of the camp and associated infrastructure. • Purchase of the mobile crushing and screening plants and all

associated conveyor systems. • Commencement of construction of the ore sorter infrastructure

module including air compressor, drier, generator, wash screen and support frame.

• Completion of an RC drilling programme at Linden Star, 500 meters south west of the Second Fortune mine.

• Grass Flat Gold Project Exploration Licences Granted enabling the commencement of on-ground Exploration.

• Moolyella Lithium project Phase 2 field work identifies Lithium bearing pegmatites on 100% Exterra lease.

Exterra Resources Limited ACN 138 222 705 ASX Code: EXC www.exterraresources.com.au Issued Capital: Ordinary Shares: 336.2m

Options: 87.1m Cash (31 Dec 2016) $4.33 million

Directors and Management: John Davis Executive Chairman

Geoff Laing Executive Director

Justin Brown Non-Executive Director Dennis Wilkins Company Secretary

December 2016 Quarterly Activities Report

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http://www.exterraresources.com.au/

1.0 LINDEN GOLD PROJECT, Western Australia (100% interest) 1.1 Project Management Approval for underground mining activities The Project Management Plan (PMP), PM-031-220041, in relation to the Major Expansion/Change to Existing Operations at Second Fortune has been approved by the Department of Mines and Petroleum (DMP). Work continues on finalising details of the mining contract with the preferred tenderer. 1.2 Second Fortune Underground Mine Development Contractor tender submissions have been adjudicated and commercial discussions are ongoing with the preffered contractor. The process of integrating contractor recommendations to the underground design is at an advanced stage and the contractor laydown area is being prepared for mobilisation. 1.3 Second Fortune Ore Sorting Development of the sorting plant is progressing well. The ore sorter has landed in Perth and all associated equipment such as compressors driers, washing screen etc. have been acquired. The sorting plant is being pre-assembled in Perth and will be shipped to site in February. The mobile crushing and screening units have been acquired and will be shipped to site in late January. The plan remains to assemble the plant on site in February and commission it on existing stockpiles at Second Fortune.

Figure 1: Ore Sorting Module under constrction (including compressor station – insert)

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1.4 Surface Works Development

Construction of the evaporation ponds for dewatering the pit and underground operation is progressing well. The first of the two ponds is complete and work has commenced on the second pond. Commission of the pit dewatering system has commenced.

Site Surface works are at an advanced stage with the completion of the accommodation camp and associated infrastructure. Old process workings have been removed and remaining sheds, pads etc are being modified for use as mining workshops and laydown areas.

Figure 2: Evaporation Pond Cell 1

Figure 3: Pit Dewatering Station

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Figure 4: Mobile Crusher Delivered to site

Figure 5: Second Fortune Camp

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Figure 6: Second Fortune Site Layout

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1.5 Ore Sales Agreement Ore sales agreement discussions are continuing. Sampling protocols have been established and confirmatory metallurgical testwork has commenced. 1.6 Gold Recovery from Waste Dumps Approvals progressing and planning has commenced to recover and haul the dump material down to the plant area for processing. 1.7 Linden Exploration

During December 2016 a Reverse Circulation (RC) drilling programme was completed at Linden Star and Second Fortune Extended following up on previously reported drill results including 1m @ 97.4 g/t Au, 5m @ 4.02 g/t Au and 2m @ 4.10 g/t Au at Linden Star and 2m @ 5.74 g/t Au and 2m @ 3.68 g/t Au at Second Fortune Extended.

14 Holes for 888m were completed at Linden Star, located 500m to the SW of Second Fortune, and 2 holes for 161m at Second Fortune Extended, located 350m to the south of Second Fortune. (Figure 7)

Assay results are currently being received and will be reported shortly.

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Figure 7: Linden Project - RC Drill Hole Location

Hill East

Second Fortune Extended

Mt Linden

Linden Star

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Figure 8: Linden Project Regional Location Plan

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2.0 GRASS FLAT GOLD PROJECT, Western Australia (100% Exterra) Exterra applied for 5 Prospecting Licences (P77/4351 – P77/4355, which were granted on the 30 September 2016), and 2 Exploration Licences (E77/2355 and E77/2365), granted during December 2016, located in the Marda-Diemals Greenstone Belt, north east of the Diemals Mining Centre, 150 km north of Southern Cross in WA (Figure 9).

Exterra commenced a review of the project (as reported in ASX release 3 May 2016), which confirmed the presence of a number of potentially economic grade gold intercepts in Reverse Circulation (RC) drill holes including:

• BRC 149: 4 metres @ 9.56 g/t Au (Including: 1m @ 33.47 g/t Au) • BRC 161: 7 metres @ 9.20 g/t Au (Including: 3m @ 18.90 g/t Au) • BRC 162: 9 metres @ 3.90 g/t Au • BRC 237: 11 metres @ 3.70 g/t Au • BRC 214: 7 metres @ 8.30 g/t Au (including: 2m @ 23.90 g/t Au)

With all tenements now granted Exterra is reviewing data for on-ground exploration.

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Figure 9: Grass Flat Gold Project – Tenement, Geology and Location Plan

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3.0 MOOLYELLA LITHIUM PROJECT, Western Australia, (E45/4462 - option to acquire 90%, ELA45/4766 100%)

The Moolyella Project is located 23 km ENE of Marble Bar and consists of E45/4462 covering 86 sq km, and ELA45/4766 covering 3 sq km, holding a substantial position in a highly mineralised Li, Sn, Ta district in the Pilbara region of WA. (Figure 10)

Figure 10: Moolyella Lithium Project Tenement Location Plan During January 2017 Exterra completed a further phase of field work following air photo interpretation which indicated targets in areas not previously explored, particularly on ELA45/4766. Field reconnaissance has confirmed the presence of extensive pegmatite outcrop on ELA45/4766 which had not previously been reported. The presence of lithium bearing minerals was noted, including Lepidolite. (Figure 11) Rock chip sampling was completed with results due shortly.

Figure 11: Lepidolite bearing pegmatite ELA45/4766

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Exploration completed during 2016 included:

• re-sampling of historic RC drill hole chips which indicate pegmatite lithologies and which are potentially Lithium bearing

• geological mapping to outline the extent of potential lithium bearing pegmatites, the presence of spodumene (pegmatite lithium mineral) and structural controls

• rock chip sampling of identified pegmatite rocks to determine their Lithium content At a 0.1% Li2O cut-off, 39 samples from the Phase 1 programme reported highly anomalous results up to 1.25% Li2O.

4.0 MALCOLM GOLD PROJECT, Western Australia (100%) The Malcolm Project consists of granted Mining Lease M37/1164 (105 ha), over 2.0km in strike, and contains 37,900 ozs* at 8.3 g/t Au in Inferred Resources. The historic North Star and Richmond Gem gold mines produced 40,000 oz of gold at an average grade of 21.03 g/t Au and 28.00 g/t Au respectively between 1894 and 1915. The project is located 18km to the east of Leonora and 70km to the NW of Zelica/Eucalyptus in the North Eastern Goldfields of Western Australia.

Exterra is reviewing data and planning further drilling to confirm and upgrade resources

5.0 ZELICA GOLD PROJECT, Western Australia (100%) The Zelica gold project is located 30km to the NW of Linden, contains 30,000 ozs* in Indicated and Inferred Resources and represents a potential production centre to support the Linden Project development.

6.0 EUCALYPTUS GOLD PROJECT, Western Australia (90-100% interest) As noted previously, the Eucalyptus Project is subject to forfeiture taken against the tenements, while under management by the prior owners. A Wardens Court hearing was attended early December 2015, where submissions were lodged and heard for the Forfeiture action. The Warden subsequently recommended forfeiture of the leases which has been referred to the Minister for Mines. Exterra has lodged a submission to the Minister and his finding is awaited.

*Refer Resources tabulation, Exterra Annual Report, June 2016, Review of Operations page 14.

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7.0 MARCH QUARTER 2017 ACTIVITIES

The following activities are planned to be undertaken during the March 2017 quarter:

Linden Gold Project:

• Finalisation of ore sale/purchase agreement

• Installation and commissioning of processing plant

• Completion Construction of evaporation ponds

• Pit and underground dewatering

• Award of mining contract

• Haul road construction

• Commence processing of surface dumps

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For further information:

Mr Geoff Laing Executive Director T +61 417178012 E [email protected]

About Exterra Resources Limited

Exterra Resources Limited (ASX:EXC) is a gold exploration and development company based in Perth, Western Australia, with a focus on high grade, high margin gold projects with near term production potential to fund the future growth of the company.

The Company’s projects are all located in the Archaean Yilgarn Craton in WA, a world class gold province which has been a prolific producer of gold since the late 1880’s and includes the Kalgoorlie “Golden Mile” deposit which has produced over 50 million ounces of gold since discovery in 1893.

Exterra’s focus is on the Linden gold project in the North Eastern Goldfields region, within the Laverton Tectonic Zone, which hosts multi million ounce deposits including Sunrise Dam (Anglo Gold) and Granny Smith/Wallaby (Barrick Gold).

The Second Fortune gold mine, at Linden, 220km by road, NNE of Kalgoorlie, is currently the subject of a development study, with all Regulatory approvals received to commence project development of an underground mining operation.

Competent Persons Statement

The information in this report that relates to database compilation, sampling processes, geological interpretation and mineralisation, project parameters and costs and overall supervision and direction of Mineral Resource is based on and fairly represents, information and supporting documentation compiled under the overall supervision and direction of John Davis (Member of the Australasian Institute of Mining and Metallurgy and the AIG). Mr Davis has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Davis consents to the inclusion in the release of the statements based on their information in the form and context in which they appear.

Information in this report that relates to estimation, depletion and reporting of Mineral Resources is based on and fairly represents, information and supporting documentation compiled by Mike Job who is a Member of the Australasian Institute of Mining and Metallurgy and a full time employee of QG Consulting Pty Ltd. Mike Job has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mike Job consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

The information in this report that relates to Ore Reserves has been compiled by Stephen O’Grady, Principal of Intermine Engineering Consultants, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr O’Grady has had sufficient experience in Ore Reserve estimation relevant to the style of mineralisation and type of deposit under consideration to qualify as Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Mineral Resources and Ore Reserves. Mr O’Grady consents to the inclusion in this announcement in the form and context in which it appears.

Please note with regard to exploration targets, the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

Forward Looking Statements

Certain statements made during or in connection with this communication, including, without limitation, those concerning the economic outlook for the mining industry, expectations regarding gold prices, exploration costs and other operating results, growth prospects and the outlook of Exterra Resources’ operations contain or comprise certain forward looking statements regarding Exterra Resources’ exploration operations, economic performance and financial condition. Although Exterra Resources believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct.

Accordingly, results could differ materially from those set out in the forward looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes that could result from future acquisitions of new exploration properties, the risks and hazards inherent in the mining business (including industrial accidents, environmental hazards or geologically related conditions), changes in the regulatory environment and other government actions, risks inherent in the ownership, exploration and operation of or investment in mining properties in foreign countries, fluctuations in gold prices and exchange rates and business and operations risks management, as well as generally those additional factors set forth in our periodic filings with ASX. Exterra Resources undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today’s date or to reflect the occurrence of unanticipated events.

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Appendix 1 ASX Additional Information for Quarterly Report to 31 December 2016

Tenement reference Location

Interest at beginning of quarter

Acquired / Disposed

Interest at end of quarter

Mining tenements E39/1232 LINDEN 100% N/A 100%

E39/1539 LINDEN 100% N/A 100%

E39/1627 ZELICA 100% Disposed 0%

E39/1754 LINDEN 100% N/A 100%

E39/1977 LINDEN 0% Acquired 100%

L39/0012 LINDEN 100% N/A 100%

L39/0013 LINDEN 100% N/A 100%

L39/0014 LINDEN 100% N/A 100%

L39/0230 LINDEN 100% N/A 100%

M37/1164 MALCOLM 100% N/A 100%

M39/0255 LINDEN 100% N/A 100%

M39/0292 EUCALYPTUS 100% N/A 100%

E39/1897 ZELICA 100% N/A 100%

M39/0386 LINDEN 100% N/A 100%

M39/0387 LINDEN 100% N/A 100%

M39/0480 EUCALYPTUS 100% N/A 100%

M39/0500 LINDEN 90% N/A 90%

M39/0629 LINDEN 100% N/A 100%

M39/0649 LINDEN 100% N/A 100%

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Tenement reference Location

Interest at beginning of quarter

Acquired / Disposed


M39/0650 LINDEN 100% N/A 100%

M39/0780 LINDEN 100% N/A 100%

M39/0781 LINDEN 100% N/A 100%

M39/0794 LINDEN 100% N/A 100%

P39/5599 LINDEN 100% N/A 100%

M39/0914 EUCALYPTUS 100% N/A 100%

M39/0966 EUCALYPTUS 100% N/A 100%

M39/0969 EUCALYPTUS 100% N/A 100%

M39/0991 EUCALYPTUS 100% N/A 100%

M39/1064 EUCALYPTUS 100% N/A 100%

M39/1101 ZELICA 100% N/A 100%

M39/1082 ZELICA 100% Disposed 0%

P39/4556 EUCALYPTUS 100% Disposed 0%

P39/4566 ZELICA 100% Disposed 0%

P39/5269 EUCALYPTUS 100% Disposed 0%

P77/4351 GRASS FLAT 100% N/A 100%

P77/4352 GRASS FLAT 100% N/A 100%

P77/4353 GRASS FLAT 100% N/A 100%

P77/4354 GRASS FLAT 100% N/A 100%

P77/4355 GRASS FLAT 100% N/A 100%

P77/4356 GRASS FLAT 100% N/A 100%

E77/2355 GRASS FLAT 0% Acquired 100%

E77/2365 GRASS FLAT 0% Acquired 100%

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+ See chapter 19 for defined terms 1 September 2016 Page 1

+Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity

Exterra Resources Limited

ABN Quarter ended (“current quarter”)

26 138 222 705 31 December 2016

Consolidated statement of cash flows Current quarter $A’000

Year to date (6 months) $A’000

1. Cash flows from operating activities - - 1.1 Receipts from customers

1.2 Payments for

(184) (671) (a) exploration & evaluation

(b) development (637) (766)

(c) production - -

(d) staff costs (25) (31)

(e) administration and corporate costs (96) (179)

1.3 Dividends received (see note 3) - -

1.4 Interest received 9 15

1.5 Interest and other costs of finance paid - -

1.6 Income taxes paid - -

1.7 Research and development refunds - -

1.8 Other (provide details if material) - -

1.9 Net cash from / (used in) operating activities (933) (1,632)

2. Cash flows from investing activities

(274) (391)

2.1 Payments to acquire:

(a) property, plant and equipment

(b) tenements (see item 10) - -

(c) investments - -

(d) other non-current assets - -

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Consolidated statement of cash flows Current quarter $A’000

Year to date (6 months) $A’000

2.2 Proceeds from the disposal of:

- 20 (a) property, plant and equipment

(b) tenements (see item 10) - -

(c) investments - -

(d) other non-current assets - -

2.3 Cash flows from loans to other entities - -

2.4 Dividends received (see note 3) - -


2.6 Net cash from / (used in) investing activities (274) (371)

3. Cash flows from financing activities 4,090 5,035 3.1 Proceeds from issues of shares

3.2 Proceeds from issue of convertible notes - -

3.3 Proceeds from exercise of share options - -

3.4 Transaction costs related to issues of shares, convertible notes or options (201) (276)

3.5 Proceeds from borrowings - -

3.6 Repayment of borrowings - -

3.7 Transaction costs related to loans and borrowings - -

3.8 Dividends paid - -


3.10 Net cash from / (used in) financing activities 3,889 4,759

4. Net increase / (decrease) in cash and cash equivalents for the period

1,649 1,575 4.1 Cash and cash equivalents at beginning of

period

4.2 Net cash from / (used in) operating activities (item 1.9 above) (933) (1,632)

4.3 Net cash from / (used in) investing activities (item 2.6 above) (274) (371)

4.4 Net cash from / (used in) financing activities (item 3.10 above) 3,889 4,759

4.5 Effect of movement in exchange rates on cash held - -

4.6 Cash and cash equivalents at end of period 4,331 4,331

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5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts

Current quarter $A’000

Previous quarter $A’000

5.1 Bank balances 2,307 439

5.2 Call deposits 2,024 1,210

5.3 Bank overdrafts - -

5.4 Other (provide details) - -

5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 4,331 1,649

6. Payments to directors of the entity and their associates Current quarter $A'000

6.1 Aggregate amount of payments to these parties included in item 1.2 119

6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 Nil

6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

Item 6.1 includes aggregate amounts paid to directors including salary, directors’ fees, consulting fees and superannuation.

7. Payments to related entities of the entity and their associates

Current quarter $A'000

7.1 Aggregate amount of payments to these parties included in item 1.2 Nil

7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 Nil

7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

N/A

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8. Financing facilities available Add notes as necessary for an understanding of the position

Total facility amount at quarter end

$A’000

Amount drawn at quarter end

$A’000

8.1 Loan facilities Nil Nil

8.2 Credit standby arrangements Nil Nil

8.3 Other (please specify) Nil Nil

8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

N/A

9. Estimated cash outflows for next quarter $A’000

9.1 Exploration and evaluation 100

9.2 Development 2000

9.3 Production 250

9.4 Staff costs 50

9.5 Administration and corporate costs 100

9.6 Other (provide details if material) -

9.7 Total estimated cash outflows 2500

10. Changes in tenements (items 2.1(b) and 2.2(b) above)

Tenement reference and location

Nature of interest Interest at beginning of quarter


10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced

10.2 Interests in mining tenements and petroleum tenements acquired or increased

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Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 30 January 2017

(Company secretary)

Print name: Dennis Wilkins

Notes 1. The quarterly report provides a basis for informing the market how the entity’s activities have been

financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. By the Company signing this Appendix 5B, the Managing Director and CFO declare that the Appendix 5B for the relevant quarter:

• presents a true and fair view, in all material respects, of the cashflows of the Company for the relevant quarter and is in accordance with relevant accounting standards;

• the statement given above is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and

• the Company’s financial records have been properly maintained and the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

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